Germany’s economy, once the envy of Europe, is struggling to regain its footing. The country’s economic growth has been stagnant for years, with forecasts indicating another decline this year. Industry after industry, including manufacturing, construction, and electric vehicles, are facing significant challenges.
The crisis is attributed to a combination of factors, including rising energy costs, high labor costs, and a decline in competitiveness. German companies rely heavily on foreign markets for sales growth, making them vulnerable to global trade wars and fluctuations in international demand. The market once considered most promising, China, has become increasingly unforgiving, leading to declining exports.
Manufacturing, which was once the backbone of Germany’s economy, is now struggling to stay afloat. High energy costs are a major culprit, with Germans paying more for electricity than their neighbors do. This has made it difficult for German companies to compete with rivals in Europe, Asia, and America, where electricity costs are lower.
The labor market is also facing significant challenges. German workers are among the most expensive in Europe, with higher hourly wages and fewer working hours compared to peers. The country’s population is experiencing a shift towards part-time work, with more people logging fewer hours or taking sick days.
To address these issues, politicians across the political spectrum agree that Germany needs to change its approach to competitiveness. However, their proposed solutions have been met with skepticism, particularly among voters who are worried about the impact on refugees and migrants.
The situation has become a national crisis, with many Germans feeling like they’ve lost their economic edge. The government’s forecast of anemic growth and the country’s reliance on foreign markets make it difficult to predict a turnaround in the near future. As Germany navigates this challenging period, one thing is clear: the country needs to fundamentally change its approach to competitiveness if it wants to regain its economic footing.
Source: https://www.nytimes.com/interactive/2025/02/21/world/europe/germany-economy-election.html